When choosing the best health plan for you and your family, no one will argue that there is much to consider. However more often than not, it comes down to premiums and deductibles. For the sake of clarity, let’s define both. Premiums are a monthly (or annual) amount, billed by the insurance company, for the chosen plan. Deductibles are a set amount that you must pay, during the policy period, before the insurance company either pays a portion (70% or 80%) or 100% of your claims.
Annual cost usually has some weight in the decision of which plan to go with. Most people calculate their annual cost by adding the annual premium + total deductible, but in reality, this is the wrong way to do it. The truth is – it’s just not accurate. You must consider out-of-pocket maximums, as well as co-pays, if your plan requires them.
Let’s get back to deductibles and a few key facts:
- The higher the deductible, the lower the premium.
- High deductible plans allow you to enroll in a Health Savings Account (HSA).
- “High deductibles” are anything $1,700 and up.
- Deductibles can be paid for you.
- Deductibles do not have to be paid-in-full.
In 2018, the average health insurance premium for an individual was $440/month and $1,168 for a family, as reported by eHealthInsurance.com. It went up only 4% in 2019, but it will surely go up again in 2020. But why use the individual market when group plans are “all the rage,” right? WRONG. Take a look at the average premiums for individuals and families, in a group setting, as reported by KFF.org. As you can see, group rates aren’t always better. This study shows them to be at least 50% more, in some cases. Depending on the overall health of the group, the premiums could be even higher to off-set the risk associated with the abundance of “unhealthy” people.
Here’s the thing…
Any type of insurance is used to hedge against an unbearable amount of bills, that could create a tremendous amount of financial hardship. Insurance (again, of any type), should never be expected to cover 100% of anything. With that being said, how do you make the right decision? First you must establish your current needs (i.e. how often do you go to the doctor, medications, or just trying to be covered if something big happens). Second, determine a budget range. Provide these details, along with any concerns to your health insurance broker who will be able to generate a strategy that fits the needs of you, your family, and your lifestyle.
But you’re healthy, right?
Most people are fairly healthy and only see the doctor 1-2 times per year. If that’s you, don’t focus on the deductible because at the end of the day, it’s not something that has to be paid in order to receive any type of benefit. Focus on a premium you can commit to each month, and make sure your broker covers as many gaps as possible should something happen. All-in-all, premiums are more important than deductibles because you commit to paying that amount each month/year and it’s the only non-negotiable rate. So why focus on a deductible that you may be too healthy to meet anyway? Save your money, spend wisely, and choose a health insurance broker that will make sure that you’re setup for success should something happen.
Ready for your affordable health insurance quote or to see how your deductible can be paid for you?